Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 17

“Give me the ‘McFacts,’ mam, nothing but the McFacts!” So argued the defense attorney for McDonald’s Corporation as she questioned Stella Liebeck, an 81-year old retired sales clerk, two years after her initial lawsuit against McDonald’s claiming it served dangerously hot coffee. Liebeck had bought a 49-cent cup of coffee at the drive-in window of an Albuquerque McDonald’s, and while removing the lid to add cream and sugar, she spilled the coffee and suffered third degree burns of the groin, inner thighs and buttocks. Her suit claimed the coffee was “defective.”During the trial it was determined that testing of coffee at other local restaurants found that none came closer than 20 degrees to the temperature at which McDonald’s coffee is poured, about 180 degrees. The jury decided in favor of Liebeck and awarded her compensatory damages of $200,000, which they reduced to $160,000 after determining that 20 percent of the fault belonged with Liebeck for spilling the coffee. The jury then found that McDonald’s had engaged in willful, reckless, malicious or wanton conduct, the basis for punitive damages. It awarded $2.7 million in punitive damages. That amount was ultimately reduced by the presiding judge to $480,000. The parties then settled out of court for an amount reported to be less than the $480,000.

For its part, McDonald’s had suggested that Liebeck may have contributed to her injuries by holding the cup between her legs and not removing her clothing immediately. The company also argued that Liebeck’s age may have made the injuries worse than they might have been in a younger individual, “since older skin is thinner and more vulnerable to injury.”

Who is to blame for the McSpill? Be sure to support your answer with a discussion of personal responsibility, corporate accountability, and ethical reasoning.

Step 1 of 2

The events in the articles are summarized below:

• Company M sells hot coffee that pertains to industry standards

• Some people spill hot coffee on themselves

• They sued and received a lot of money in compensation

• Many people believe these lawsuits as frivolous